Companies with high churn typically spend vast amounts on marketing to try to replace their defectors. However, as it’s more cost-effective to win back lost customers than to garner new ones perhaps they should be using strategies aimed at getting “lost” customers to return. A study completed by Marketing Metrics says you normally have a 20 to 40% chance of winning back an ex-customer – so, how’s it done?
Why Did Your Customers Leave?
If they say it’s price then you know there is a disengagement between what you offer and their perceived value. Ask questions to find out exactly what you can do to improve things and make adjustments to create a new and more profitable offer for them.
Even if you don’t get them back you will have gained valuable information to save another customer who might be considering leaving.
If you made a mistake, admit it. If you can fix the problem (with no requirement for a customer to stay) then this should leave a positive impression, even if the customer eventually decides to jump ship.
Mark Vautour from Landry’s Bicycles advises apologising sincerely: “Most issues are a simple misunderstanding. Many customers just want to be heard.” This could mean that they will still be happy to refer you to others.
Doug Ackerman from customersure asked, “How do you make sure customers are never left in any doubt that they are valued above all else?” He received the following replies:-
“Calm and Understanding” says Kayla Farr from Ultimate Paintball. However uncompromising your customers might be, always put yourself in their position and think about how you would like to be treated. They may have a valid complaint, they may be angry about the service they have received but if you remain focused they may be sufficiently impressed to stay put.
“Over and Above Expectations” says Barney Byfield from Davpack. Excellent customer service is a huge positive for any business. Don’t leave customers hanging on the ‘phone or speaking to an answerphone. Everyone has a desire to feel important so offer free shipping, a store credit, or a free t-shirt to keep customers satisfied – whatever it takes.
In a Harvard Business Review article, V. Kumar a marketing professor at Georgia State University spells out three reasons companies should focus more energy on “lost” customers.
- First, the group has demonstrated a clear need for your product or service, making them far better prospects
- Second, they are familiar with your company, thus reducing marketing costs
- Thirdly, recent technological advances allow companies to draw on information about how people used their service the first time around in order to create more successful win-back offers.
Professor Kumar believes the reasons for leaving are also predictive: customers who cancelled because of price are more likely to come back than those who left because of poor service, and people who credited both reasons for quitting are (not surprisingly) the least likely to return.
Incentives to Win Back Customers
Kumar also visited telecom companies around the world to explore their win-back strategies. Different incentives included:
- a discount (45% success rate)
- a service upgrade (41% success)
- a service upgrade plus a discount (47% success)
- offers tailored to their reasons for leaving (45% success)
A service upgrade is the cheapest strategy and has the highest return on investment. The bundled offer has the highest success rate but with the highest cost and the lowest ROI.
An incentive doesn’t always have to be a discount; it can be free shipping or a free gift with a purchase. If a special promotion is being offered, give it a sense of urgency by creating deal deadlines.
Companies should concentrate their efforts on winning back those customers who are most likely to sign up again, rather than attempting to appeal to every defector. “Too many companies go after whoever they’ve lost, throwing all these offers at them, hoping something will work,” Kumar says.
As long as you are complying with current GDPR, one of the best ways to keep customers coming back is to prevent them from leaving in the first place. This can be accomplished with newsletters, promotional offers, educational and welcome emails.
How Pricing Software Can Help
Here at BlackCurve, we aim to give companies advanced pricing software to make data-driven pricing decisions.
Our pricing software allows leading companies to test prices before making company-wide pricing changes. This ensures potential pricing adjustments make sense to a company's bottom line, ease price change fears and make prices more attractive to potential customers.
Furthermore, our software gives companies the opportunity to tap into customers' emotional buying decisions, and inform them of fantastic deals. Plus, it keeps companies compliant with legislation. Our in-built checking procedure takes care of all of that.
By leaning towards a customer-focused approach and using pricing software, more companies can stop losing customers, win them back and keep them happy.
Why not have a chat with us to see how we can help you?